Highlights include the Olympics and the Diamond Jubilee lighting up our lives, as well as England's footballers going for glory in the E...

Saturday, 10 December 2011

Clegg vows to get tough on executive pay

Nick Clegg has committed the government to a crackdown on excessive executive pay, saying that austerity in the public sector had to be balanced by curbs on "irresponsible and unjustifiable" pay rises in the private sector.

The deputy prime minister said that ministers would publish firm proposals next month, and the government was willing to legislate if necessary on measures that could include forcing firms to let workers sit on the remuneration committees setting pay rates for top executives.

"Just as we have been quite tough on unsustainable and unaffordable things in the public sector, we now need to get tough on irresponsible and unjustified behaviour of top remuneration of executives in the private sector," Clegg said in an interview on the BBC's Andrew Marr Show.

"I think we need to make sure that people in the public sector do not feel that they are doing all the heavy lifting, that people who are in a sense living by completely different rules in the private sector are also held to account."

Clegg said he was not opposed to people being paid well if they succeeded. "What I abhor is people who get paid bucketloads of cash in difficult times for failing," he said.

Clegg spoke as Lord Hutton, the former Labour cabinet minister who led the government's review on public sector pensions, said new figures showing Britain is poorer than previously thought meant that pension cuts were even more essential than ever.

Hutton said that Tuesday's report from the Office for Budget Responsibility showed that the assumptions underpinning the report Hutton published in March had now been found to be "too optimistic".

Hutton told the BBC:"The ground underneath those estimates has changed radically and I'm afraid in the wrong direction so we cannot be sure that the costs will fall over time and that we get to a more sustainable balance."

With public sector workers being penalised by cuts to their pensions and curbs on their pay, Clegg used his Marr interview to assert that the government was also taking action to deal with excesses in the private sector.

In September, at the Liberal Democrat conference, Vince Cable, the business secretary, announced two consultations covering executive pay. Clegg said those consultations were now over and the government would be publishing its response next month.

Although he stressed that final decisions had not been taken, Clegg signalled three areas where the government was minded to impose reform.

First, shareholders could be encouraged to take a more active role in restraining pay.

"Shareholders should be given a proper say," he said. "They own the companies, after all. Far too often shareholders are given a blizzard of information they don't understand and they then don't have a binding say over what executives get paid."

Second, firms could be forced to put workers on remuneration committees. And, third, they could be forced to publish information about the gap between average earnings and top earnings in their company.

Clegg said the government agreed with many of the recommendations from the High Pay Commission, the body set up by the leftwing pressure group Compass which published a report last month. "They did really extremely good work," Clegg said.

Clegg said he was particularly outraged by a recent report saying that directors working for FTSE 100 companies had had pay rises up by 49%. He said they were getting the extra money even though their firms were not doing any better and that this was "a real slap in the face for millions of people in this country who are struggling to make ends meet".

With the bank bonus season looming, the controversy about excessive executive pay is likely to continue. On Sunday, one report claimed that RBS, which is 83% owned by the taxpayer, is expected to pay £500m in bonuses to its investment bankers, while another newspaper claimed that about 24,100 staff at Barclays Capital, the bank's investment arm, are due to receive pay and bonuses worth an average £210,000.

In his Marr interview, Clegg also insisted the Lib Dems would be able to fight the next election on a different policy platform to the Tories even though the autumn statement means both parties are now committed to spending cuts after 2015.

Clegg said that, even though both parties were agreed on the need for cuts, they would not necessarily agree on where those cuts should fall.

As examples of Lib Dem priorities, he said wealthy pensioners should lose the right to free bus passes and free TV licences and that the costs of replacing Trident should be cut.